PINNACLE TOWER SDN BHD - 2015

MARC has affirmed the ratings of MARC-1_IS and AAA_IS on Pinnacle Tower Sdn Bhd’s (Pinnacle Tower) RM50 million Islamic Commercial Papers (ICP) and RM400 million Islamic Medium-Term Notes (IMTN) respectively with a stable outlook.

The affirmed ratings and stable outlook are premised on the outstanding principal and profit payments totalling RM92.5 million under the ICP/IMTN programmes being fully cash backed in the designated Finance Service Reserve Account. In addition, Pinnacle Tower has undertaken not to make any further drawdowns under the rated programmes. The cash reserve has been earmarked to meet the full and final principal and profit repayments due on the programme expiration date of March 4, 2016.

Pinnacle Tower is a special purpose funding vehicle for its parent company, Sacofa Sdn Bhd (Sacofa), to raise financing through the rated programmes to fund the development and operations of telecommunication infrastructure and services, including its related businesses in the state of Sarawak under an exclusive concession granted by the State Government of Sarawak to Sacofa. Upon repayment of the outstanding amount and cancellation of the ICP/IMTN programmes, MARC is expected to withdraw the ratings.

Major Rating Factors

Strengths

• Outstanding balance of IMTN is fully cash backed; and
• Healthy operating cash flow and improved debt service coverage.

Challenges

• Concentration of credit exposures in few offtakers with respect to telecommunication tower lease rentals.